Imagine
being able to secure loans with some of the lowest interest rates in
the banking industry. Or conveniently transferring funds from one bank
account
to another, or perhaps, experiencing the best possible customer banking
service around.
To
get all these and other “perks”, most financial institutions would
require one to become their preferred client. But in today’s digital
technology and
in the global banking industry, getting access to all these benefits is
simply a matter of banking customers securely sharing their data with
other financial institutions. This is the beauty of open banking.
Open
banking enables financial services customers such as companies,
entrepreneurs and ordinary depositors and borrowers, to have access to
various products
and services from competing banks and other financial institutions by
allowing the latter to digitally and securely access their financial
information. Customers can compare product offerings and avail of the
best ones that suit their needs and fit their capabilities,
thereby helping them earn more from bigger savings interest rates,
avail of loans more easily, and pay more conveniently, towards managing
and improving their finances.
With
the concept of open banking, financial institutions such as banks—big
and small—fintech companies, and other players, can share their
respective clients’
data through the use of application programming interfaces (APIs).
These APIs enable customers or the data subjects to share only data
pertinent to the product or service they are looking to avail and not
the account credentials.
The
European Union (EU) initiated PSD2 (Revised Payment Service Directive)
as an emerging Open Banking standard. This is a game-changer in the
industry as
banks’ monopoly on their customer account details will soon disappear.
This required European banks to provide Open APIs which does not need
additional customized developments. It reduces barriers to innovation
and limits the big banks’ “walled gardens.” In
fact, even the Philippines’ data privacy law was influenced by EU’s
stringent data protection regulation, including the adoption of the
General Data Protection Regulation (GDPR).
Open
banking can enable banks and other financial institutions to have
access to data that will enable them to process loan applications
quicker or better
advise their clients on their finances. This encourages banks to be
more competitive, leading to more affordable products, faster services,
better customer relations, and investing in digital technologies, to the
benefit of customers.
This
is what Rizal Commercial Banking Corporation (RCBC) hopes to spearhead
in the industry as it recently became the first local bank to advocate
and implement
open banking, affirming its position as a digital trailblazer in the
financial industry.
But
more than encouraging competition among banks, RCBC aims to lead the
way to open banking in the country to become the Filipinos’ prime
financial inclusion
partner.
“With
open banking, we can power the transactions of rural banks,
cooperatives, micro-financial institutions and other small players,
giving their customers
access to a wide array of financial services using RCBC Open APIs,”
said Lito Villanueva, RCBC Chief Innovation and Inclusion Officer.
Already,
RCBC has beefed up its open banking capabilities by establishing API
partnerships with leading fintech companies; local payment networks
PESONet
and Instapay; and IBM Blockchain World Wire remittance.
Through
open banking, RCBC aims to serve the global financial services needs of
more than 30 million customers of fintechs, rural banks, cooperatives,
and
micro-financial institutions all over the country.
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